Airbus - 2022 Universal Registration Document
Risk Factors / 2 Business-Related Risks
Technologically Advanced Products and Services
The Company offers its customers products and services that are technologically advanced, so the design, manufacturing, components and materials utilised can be complex and require substantial integration and coordination along the supply chain. In addition, most of the Company’s products must function under demanding operating conditions. Throughout the lifecycle of its products, the Company performs checks and inspections, which may result in modifications, retrofits or other corrective actions, each of which may have an adverse effect on production, operations, in-service performance or financial condition. There can be no assurance that the Company’s products or services will be successfully developed, manufactured or operated or that they will perform as intended. Certain of the Company’s contracts require it (i) to forfeit part of its expected profit, (ii) to receive reduced payments, (iii) to provide a replacement launch or other products or services, (iv) to provide cancellation rights, or (v) to reduce the price of subsequent sales to the same customer if its products fail to be delivered on time or to perform adequately. No assurances can be given that performance penalties or contract cancellations will not be
imposed should the Company fail to meet delivery schedules or other measures of contract performance, in particular with respect to programmes and developments such as the A220, ACJ TwentyTwo, A321XLR, A330 LMXT, A350-1000 ULR, A350 Freighter, A400M, H160 or Ariane 6. See “– Business-related risks – Programme-Specific Risks” below. In addition to the risk of contract cancellations, the Company may also incur significant costs or loss of revenues in connection with remedial action required to correct any performance issues detected in its products or services. Moreover, to the extent that a performance issue is considered to have a possible impact on safety, regulators could suspend the authorisation for the affected product or service. Any significant problems with the development, manufacturing, operation, performance or safety of the Company’s products and services could have a significant adverse effect on the Company’s financial condition and results of operations as well as on the reputation of the Company and its products and services.
Dependence on Public Spending and on Certain Markets
In any single market, public spending (including defence and security spending) depends on a complex mix of geopolitical considerations and budgetary priorities, and may therefore be subject to significant fluctuations from year to year and country to country. Any termination or reduction of future funding or cancellations or delays impacting existing contracts may have a negative effect on the Company’s financial condition and results of operations. In instances where several countries undertake to enter together into defence or other procurement contracts, economic, political or budgetary constraints in any one of
these countries may have a negative effect on the ability of the Company to enter into or perform such contracts. The Company has a geographically diverse backlog. Adverse economic and political conditions, as well as downturns in broad economic trends in certain countries or regions, may have a negative effect on the Company’s financial condition and results of operations generated not only in those regions but may also affect the rest of the world due to complex economic interdependencies.
Availability of Government and Other Sources of Financing
In prior years, the Company and its principal competitors have each received different types of government financing of product research and development. However, no assurances can be given that government financing will continue to be made available in the future. Moreover, the availability of other outside sources of financing will depend on a variety of factors such as market conditions, the general availability of credit, the Company’s credit ratings, as well as the possibility that Competition and Market Access The markets in which the Company operates are highly competitive. With regard to the Company’s commercial aircraft business for aircraft with more than 150 seats, the Company today operates in a competitive duopoly. In China, however, an indigenous large aircraft (single aisle) received its type certificate in September 2022 from the Chinese authorities. The Company
lenders or investors could develop a negative perception of the Company’s long- or short-term financial prospects if it incurred large losses or if the level of its business activity decreased due to an economic downturn. The Company may, therefore, not be able to successfully obtain additional outside financing on appropriate terms, or at all, which may limit the Company’s future ability to make capital expenditures, fully carry out its research and development efforts and fund operations.
therefore also faces competition from a third player, in China only, as this certification has not yet been recognised by any other regulator. The design, development and production of commercial aircraft involves high barriers to entry (including certification requirements, large investment needs, skilled competencies and access to technology and long development
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Airbus / Universal Registration Document 2022
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